Asset Management Accountability Framework February 2016

Asset Management Accountability
Framework
February 2016
The Secretary
Department of Treasury and Finance
1 Treasury Place
Melbourne Victoria 3002
Australia
Telephone: +61 3 9651 5111
Facsimile: +61 3 9651 5298
dtf.vic.gov.au
State of Victoria 2016
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ISBN 978-1-922222-72-5 (online)
Published February 2016
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Contents
1.
Overview of the Asset Management Accountability Framework ............. 1

1.1
1.2
1.3
1.4
2.
3.
Background and overview ................................................................................................. 1

Purpose of the Asset Management Accountability Framework ........................................ 2
AMAF principles ................................................................................................................. 4
Outcomes sought ............................................................................................................... 5
The asset lifecycle ................................................................................... 7

Key requirements .................................................................................... 9
3.1
3.2
3.3
3.4
3.5
Leadership and accountability ........................................................................................... 9

Planning ........................................................................................................................... 14
Acquisition ....................................................................................................................... 17
Operation ......................................................................................................................... 18
Disposal ............................................................................................................................ 21
4.
Key terms/definitions ............................................................................ 22
Appendix 1 Mandatory requirements ........................................................... 24
Appendix 2 - Guidance ..................................................................................... 29
1.
Overview of the Asset Management Accountability

Framework
1.1
Background and overview

The Asset Management Accountability Framework (AMAF) establishes a flexible and nonprescriptive set of requirements which aim to ensure Victorian public sector Accountable Officers
manage asset portfolios appropriately. It applies to non-current assets (physical and intangible),
including information and communication technology (ICT) assets, controlled by government
departments, agencies, corporations, authorities and other bodies that are captured by the
Standing Directions of the Minister for Finance made under the Financial Management Act 1994
(FMA). However, it does not apply to financial assets. Elements of the framework also apply where
asset management activities are devolved and fully or partially outsourced. Land, buildings,
infrastructure, plant and equipment comprise the bulk of Victorias non-current assets, according
to value.
Beyond the principles of the framework, this document details both mandatory asset
management requirements (practices Accountable Officers must implementsee Appendix 1)
and general guidance for agencies responsible for managing assets (practices Accountable Officers
should implementsee Appendix 2).
Being non-prescriptive in its implementation, the framework allows Responsible Bodies and
Accountable Officers flexibility to manage their organisations assets in a manner that is consistent
with government requirements, their own specific operational circumstances and the nature of
their asset base. The AMAF outlines how assets should be managed across their whole lifecycle to
support service delivery objectives. It also outlines the policies and processes Accountable Officers
must and should establish to ensure asset management activities are appropriately implemented
where their organisation has devolved or fully or partially outsourced asset management
activities. It does not, however, prescribe how Accountable Officers should deliver their
organisations services, what their service delivery objectives should be or what asset standards
Accountable Officers should set or meet.
Asset management responsibilities

Asset management is the coordinated activities of an organisation, carried out over an assets
whole lifecycle, to realise full value from assets in delivering their service delivery objectives.
Realisation of value will normally involve a balance of costs, risks, opportunities and performance
benefits1.
The Department of Treasury and Finance (DTF) is responsible for ensuring the AMAF remains up
to date and consistent with legislation and other associated government asset policies and
frameworks. DTF is also responsible for advising government on whole of government asset
management issues, which assists government in making decisions on asset planning, acquisition,
operational and disposal matters.
Accountable Officers, on the other hand, are responsible for applying the AMAF principles and
requirements to manage assets under their control.
International Standards Organisation - IS055000
Asset Management Accountability Framework

February 2016
The AMAF is complemented by a suite of other government resource allocation and asset-related
policies and frameworks that Accountable Officers must consider when supporting their
organisations service delivery and asset management. Figure 1 illustrates how the AMAF fits
within the Governments resource management framework, with further detail provided in the
following sections of this document.
Appendix 1 outlines an Accountable Officers mandatory attestation requirements under the
AMAF. Attestation will be mandatory for 2017-18 annual reports.
Figure 1: The relationship between the AMAF and other government policies
1.2
Purpose of the Asset Management Accountability Framework

The role of public assets in Victoria is to support the delivery of government services to the
community, including preserving cultural and heritage assets with unique historical, cultural or
environmental attributes. This framework seeks to ensure Accountable Officers are managing
Victorias sizeable portfolio of assets efficiently and effectively. If an asset does not, or will not,
contribute effectively to a service over time2, it should not be held or used by the public sector.
Decisions about asset ownership and retention should always be service driven.
Some assets such as protected transport corridors may be an option to meet a potential future service need and should be evaluated
over the long term.

February 2016
However, ownership and use of assets is just one mechanism of delivering a service and should
only be considered as one part of broader service delivery planning. Other resources, such as
front-line service delivery staff and contracted non-government organisations, also contribute to
an organisations capacity to deliver its services. Therefore, it is important that Accountable
Officers:
identify their organisations current and future service needs and standards;
plan their organisations services;
consider all means of service delivery available; then
plan and manage their organisations assets and other resources to effectively and efficiently
deliver services;
adequately evaluate and monitor risks to assets and service delivery; and
learn by doing by adapting service delivery and asset management to measured performance
outcomes.
Managing assets effectively

Sound asset management requires the effective planning, acquisition, operation and disposal of
the most appropriate assets to meet current and likely future service delivery demands. It also
involves Accountable Officers incorporating asset management into their organisations overall
corporate planning frameworks.
Effective asset management is achieved by:
matching assets to service delivery needs;
establishing asset standards to meet service delivery needs and standards;
managing assets within available resources and legal/technical requirements;
balancing competing service and asset needs and priorities, including whether assets are fit for
purpose and aligned with government policy objectives, and selecting options that best meet
desired government outcomes;
adopting a whole of lifecycle approach to planning asset investment and management
decisions;
monitoring, evaluating and improving the performance of assets, including planning for
uncertainty or the use of real options where appropriate;
being responsive to foreseen and unforseen changes in demand or use;
having appropriate strong asset management accountability and responsibility processes,
systems, risk management and reporting requirements in place;
establishing responsibility and accountability for maintaining, and efficiently and effectively
using the assets already in place;
ensuring informed decision making through adequate asset information, including asset
condition, existing and alternative asset use and residual value;
identifying and managing the risks of asset ownership and operation for continuity of service
for integration into overall risk management frameworks; and
adopting a continuous improvement and adaptive management approach to asset investment
policies and practices.
Effective asset management should result in appropriate service delivery and value outcomes
from assets over their lifecycles, including adapting approaches where circumstances change,
within the available resources. Figure 2 outlines how asset planning and management interface
with service planning and budgetary and evaluation processes.
February 2016
Figure 2: Service planning interface with asset planning and management
1.3
AMAF principles
The AMAF is based on a set of guiding principles. All asset management decisions should be
guided by these principles:
Service delivery focused (Figure 3)
All asset management activities aim to support service delivery throughout the State.
Planning includes evaluating all potential methods to meet demands for service delivery.
All asset management decisions are based on service delivery needs and outcomes.
Figure 3: Service delivery is at the core of asset management
Whole of life
cycle
Informed
decisionmaking
Integrated
into planning
Service
delivery
Considerate
of all
Government
policies

February 2016
Responsible
and
accountable
Integrated into planning frameworks

Asset planning and management are integrated into relevant government policy and
planning frameworks, and budgetary and evaluation processes and are aligned with
organisational objectives.
A whole of lifecycle approach
A whole of lifecycle approach, incorporating real options analysis where appropriate, to
planning asset investment and management decisions.
Planning and management take into account all costs incurred throughout the lifecycle of
the assets, from acquisition to disposal, and related benefits and risks.
Informed decision making
Asset management decisions evaluate all potential methods to meet the demands for
service delivery, including engaging the private sector, non-asset solutions and demand
management strategies.
Asset management decisions consider meaningful performance measurement of assets,
through key performance indicators and monitoring of outcomes.
Responsible and accountable
Accountability for service delivery and asset management are mutually dependent.
Ownership, control, accountability, responsibility and reporting requirements for assets are
established, relevant, clearly communicated and implemented, including for outsourced
services.
Asset information management systems (AIMS) are maintained at a level that meet
organisational and government information, decision making and reporting requirements.
Asset-related risks are fully integrated into the organisational risk management framework.
Considerate of government policies and priorities
All asset management activities are undertaken as part of the Governments overall
resource allocation and management framework.
Asset management decisions aim to achieve government outcomes.
1.4
Outcomes sought
Through the AMAF, and its other asset-related frameworks and policies, the Government aims to:
efficiently provide the services required by Victorians by ensuring that assets are appropriately
planned, built, acquired, used, maintained and exited from or disposed of;
support service delivery by providing the right assets at an appropriate time and location in
appropriate amounts;
enhance the service potential of assets through improved management of the existing asset
base. This includes exercising flexibility to delay asset acquisition, expansion or disposal where
changed circumstances warrant;
maximise value for money, by taking account of the full costs (including embedded option
value) of acquiring, holding, using and disposing of assets throughout their lifecycles, as well as
exploring private sector engagement options;

February 2016
only acquire assets that are required to support service delivery or cultural outcomes;
manage any associated asset risks efficiently and effectively;
apply lessons from the performance of the existing asset base when considering new
investment; and
consider the use of non-asset service delivery alternatives to minimise demand for new assets.

February 2016
2.
The asset lifecycle
Non-current physical assets (including ICT assets) have a long life (greater than 12 months). They
consume resources to acquire or create them and keep them in operational condition over their
lifetime.
Many decisions about assets have long-term implications. Figure 4 outlines the key elements of
the AMAF and issues Accountable Officers should consider in managing assets throughout the
lifecycle.
Figure 4: The AMAF asset lifecycle
PLANNING
ACQUISITION
Asset management strategy

Planning for uncertainty
Business cases
Risk management
Cost/benefit analysis
Accounting treatment
Non-asset alternatives
Acquisition process
Risk evaluation
Procurement method
Leadership and accountability

Governance
Attestation
Performance management
Achievement of Government outcomes
Continuous improvement and flexibility
DISPOSAL
Retirement
Replacement
Renewal
Redeployment
OPERATION
Monitoring
Maintenance
Information management
Asset valuation
Utilisation
Functionality
In addition to overarching leadership and accountability elements, the stages through which an
asset generally passes during its life are the:
planning stage, where the need is identified and the requirement for a new asset is planned
for and justified;
acquisition stage, where the asset is purchased, constructed, or otherwise created;
operation stage, where the asset is used for its intended purpose. This stage may be marked
by periodic refurbishment or major repair, requiring the asset to be taken out of service for
periods of time; and
disposal stage, initiated when the economic life of the asset has expired, when there is no
longer a need for the service provided by the asset or the asset in the provision of the service
has disappeared.

February 2016
The stages of the asset lifecycle align with key stages of the investment lifecycle and high
value/high risk (HVHR) guidelines. However, the investment lifecycle and HVHR guidelines focus
on processes that should be adopted when contemplating investing in new services or assets, or
major upgrades to existing services and assets. The AMAF asset lifecycle outlines processes that
must and should be adopted to manage entire asset bases.
The AMAF applies to all stages of the asset lifecycle, but focuses on requirements for the planning
and operation stages, and leadership and accountability arrangements. Other government policies
and frameworks complement the AMAF across all stages of the lifecycle, particularly the
acquisition and disposal stages. Accountable Officers should be aware of these, and ensure they
comply (if applicable), when undertaking their asset management responsibilities.
Decisions taken about an asset in one stage can affect its performance and costs in others. For
example, inadequate attention to maintenance can accelerate the need for major repairs, or
shorten the operational life of the asset. Conversely, careful management of existing assets can
extend their effective life and avoid or defer the need for new acquisitions. Design and materials
used in the construction of an asset can also affect the operational cost of the asset over its whole
lifecycle. Therefore, all stages of the lifecycle should be considered when making decisions about
an asset or asset management more broadly.

February 2016
3.
Key requirements
The following sections outline key requirements of the AMAF that Accountable Officers must and
should follow to implement effective asset management systems.
An effective asset management system provides a structured approach for the development,
coordination and control of asset related activities undertaken by an organisation, and for aligning
these activities with the organisations service delivery objectives.
The AMAF applies to an organisations assets as defined under the Australian Accounting
Standards and asset thresholds established by each Accountable Officer. The AMAF is designed to
be flexible enough to serve assets of varying size and function across government that support a
range of service outcomes. Accountable Officers must apply the mandatory requirements of the
AMAF consistent with their organisations asset threshold.
Accountable Officers need to be aware of other requirements (e.g. enabling legislation) that
applies to planning, acquiring, managing, operating and disposing of their organisations assets.
Further guidance on good asset management practices can be found in the international standard
ISO 55000 Asset Management series.
3.1
3.1.1
Overview
Resourcing and skills
Accountable Officers must ensure that asset management functions are established and that their
organisation is appropriately resourced with qualified and skilled asset management staff.
Accountable Officers should determine the resources required (e.g. staff, equipment and
systems), and the skills and education needed by their asset management staff for each stage of
the asset lifecycle. The skills, education and training required will vary depending on existing
capability within the organisation. Where asset management activities are devolved or outsourced
including to entities excluded from the Standing Directions, Accountable Officers must ensure that
contracted service providers or entities excluded from the Standing Directions have arrangements
in place to ensure their staff are appropriately skilled and trained.
Ongoing training and education is required to maintain the appropriate standards of asset
management. This can include encouraging staff to attend relevant training or seminars,
subscribing to relevant publications, on-the-job training and coaching, and engagement with
industry experts.
Promotion of asset management

Asset management leadership and accountability is a key part of the AMAF and applies to all
stages of the asset lifecycle. Effective asset management is supported by organisational leaders
who promote the principles and policies of asset management.
In promoting/communicating the AMAF and the organisations asset management strategy, an
Accountable Officer should require staff to be informed of:
the role of asset management within the organisation; and
their contribution, role and responsibilities for asset management.

February 2016
Management should drive implementation and adherence to the AMAF, the organisations asset
management system and any supporting policies. Management should also drive a culture of
continuous improvement in asset management.
Management should also proactively promote the implementation of the AMAF and asset
management more broadly within the organisation will ensure that asset management adds value
and is not just a compliance process. It should also support the Victorian public sector to deliver
high quality and efficient services to the community.
Without leadership and accountability at all levels in an organisation, but particularly from
management and Accountable Officers, an organisations asset management strategy and service
delivery objectives may be ineffective.
3.1.2
Governance
Accountable Officers must establish appropriate governance frameworks to support the
management of assets in their direct control, as well as being considerate of the governance
frameworks that other organisations within their portfolio have to support management of assets
in their control.
Allocating asset management responsibility

Responsibility, authority and accountability for all stages of the asset lifecycle must be clearly
defined and allocated within an Accountable Officers operating frameworks. This includes
allocating, documenting and clearly communicating relevant asset management responsibilities
and accountabilities for staff. Conversely, all asset management activities must only be carried out
with proper authorisation, including appropriate financial and other delegations.
As part of this, Accountable Officers must document:
who is responsible for monitoring compliance with the AMAF and ensuring systems and
processes to support the AMAF are in place; and
who is responsible and accountable for decision making for each stage of an assets lifecycle.
Ultimate accountability for asset management within the organisation resides with the
Responsible Body, which is consistent with the attestation requirements for various functions of
the Standing Directions of the Minister for Finance.
The allocation of asset management responsibilities and accountabilities should be incorporated
into relevant staff performance plans. Appropriate resources should be allocated to support staff
with these responsibilities/accountabilities.
Where asset management functions are devolved or outsourced, including to entities excluded
from the Standing Directions, Accountable Officers must have appropriate internal management
processes established to ensure that they and their outsourced providers or entities excluded
from the Standing Directions are maintaining and managing assets to the required standard(s)
(e.g. regular performance reporting).
Other policies
Accountable Officers should also consider their organisations alignment with the processes and
principles outlined in the international standard ISO 55000 Asset Management Series, as
appropriate.
10

February 2016
3.1.3
Application and Attestation

Standing Directions of the Minister for Finance
The Standing Directions of the Minister for Finance are made under the FMA, Section 8,
establishing standards for financial management accountability, governance, reporting and
practice for public sector bodies.
The purpose of the Directions is to achieve a high standard of public financial management and
accountability in the Victorian public sector in line with the principles of sound financial
management in the FMA.
The Standing Directions focus on accountability and achieving key control objectives. They provide
sufficient flexibility for application by organisations of different sizes and scope. Where
appropriate, the Standing Directions are supported by specific requirements set out in DTF
Procedures and additional Guidance supporting the Standing Direction.
The new Standing Direction 3.4.9 Managing Assets which mandates the AMAF has been
released with this policy document for information only, with it to come into effect on
1 July 2016. From this date it will replace the existing Standing Direction 3.4.9 Physical and
Intangible Assets.
It is important to note that government frameworks are periodically revised. It is likely there will
be a new Direction comparable to Direction 3.4.9 Managing Assets with any revision to the full
set of Standing Directions.
Application and attestation

The AMAF is enforced by the Standing Directions which set out a number of matters relevant to
the AMAF, including:
those Victorian Public Sector agencies that are subject to AMAF (i.e. those that are subject
to the Standing Directions); and
requirements to demonstrate compliance with AMAF, including public attestation in
annual reports.
As part of the Standing Directions, from the conclusion of the 2017-18 financial year, the
Responsible Body must attest in their annual report, that their organisation is compliant with the
requirements of the Standing Directions. The organisations audit committee, or an alternative
review mechanism when there is no audit committee3, must verify this view prior to finalising
attestation. Agencies are also subject to any other requirements under the Directions to ensure
compliance and support the attestation.
Ensuring compliance with the AMAF will require asset management to be overseen by senior staff,
at an appropriate level determined by the Accountable Officer. It will also help ensure that asset
management systems for all stages of an assets lifecycle are appropriately implemented,
reviewed and monitored.
In cases where assets are managed by multiple agencies within a portfolio, Responsible Bodies
may not need to attest to compliance with some mandatory requirements of the framework for
some assets when another agency within the portfolio has a clearly defined responsibility for
meeting that mandatory requirement.
Portfolio relationship
Under section 13A of the Public Administration Act 2004, the Department Head (Secretary) has
responsibilities for advising the portfolio Minister on matters relating to relevant portfolio entities
3
Refer to provisions in the Standing Directions on the role of the Responsible Body when the agency has been exempt from audit
committee requirements..

February 2016
11
and for working with and providing guidance to these entities. Consistent with this role,
Department Heads are expected to advise the portfolio Minister if any significant asset
management issues relating to their relevant public entities arise, where necessary. This is
separate to attestation.
3.1.4
Performance management
Monitoring asset performance
It is important that asset performance is appropriately and continuously reviewed and evaluated
to verify that required outcomes, including service delivery objectives, are being achieved and
that agencies learn by doing, which supports continuous improvement. In order to assess
whether these objectives are being achieved Accountable Officers should:
identify their organisations service needs and standards;
plan their organisations services;
consider all means of service delivery available; then
identify their organisations asset needs;
establish and set asset standards or benchmarks required to achieve these service objectives;
plan, monitor and manage their organisations assets, including asset-related risks to
effectively deliver services in line with the established standards or benchmarks; and
evaluate performance, the effectiveness of the established standards and benchmarks and,
where appropriate, implement changes to support continuous improvement.
Accountable Officers must establish performance standards and targets for their assets,
considerate of available resources that form part of their broader service planning goals.
Accountable Officers must also establish and maintain management processes to regularly record,
monitor and assess performance, and use those results to improve performance. Performance
should be monitored by Accountable Officers against their own established asset standards,
targets or benchmarks to establish whether assets are being managed effectively,
underperforming or costly to own and operate.
There are a number of factors to be considered when setting and monitoring targets to assess an
assets performance, including:
service delivery needs;
physical condition;
utilisation;
functionality; and
financial performance.
When comparing performance outcomes against asset standards or benchmarks, the criteria
should be considerate of, where possible, relevant data from other comparable organisations or
assets. The performance and utilisation of assets must be reviewed periodically.
Asset performance monitoring and continuous improvement strategies must also be incorporated
into the overall corporate and strategic planning framework.
Asset management system performance

In addition to monitoring the performance of assets, Accountable Officers must establish systems
and processes for monitoring the performance of both:
their assets; and
the overall asset management systems themselves;
12

February 2016
to ensure that the systems have been implemented and maintained, and are effective in meeting
asset management requirements and responsibilities.
This monitoring should also ensure that the overall asset management system is updated as
knowledge improves and circumstances change.
Commencing in 2020-21 Responsible Bodies must, at least every three years, conduct a
self-assessment of the level of asset management maturity within their organisation, and other
organisations within their annual report, and state this in their annual report. As part of this
self-assessment, Responsible Bodies must evaluate:
the maturity of their asset management systems and practices;
the maturity of their systems and practices against their aspirational target; and
their path towards achieving their aspirational target.
Key performance indicators

In order to ascertain the performance of an organisations assets, key performance indicators
(KPIs) should be established. Useful KPIs could be based around:
operational performance of the asset in meeting its service delivery objectives (e.g. the quality
of the service delivered by using the asset, user satisfaction);
asset utilisation (e.g. capacity usage, survivability, functionality, Occupational Health and Safety
standards, environmental impact, legislative, regulatory or statutory compliance, condition
reports); and
operating costs (e.g. cleaning and energy costs, maintenance expenditure).
These KPIs can be financial or non-financial, qualitative or quantitative, leading or lagging.
Establishing KPIs and targets for assets should be driven by government policy objectives,
established service standards, and available resources. Accountable Officers sometimes need to
make an informed decision balancing the service, asset standards and performance they would
like to achieve with costs, while taking into account competing priorities and available resources.
Establishing KPIs and targets that incorporate benchmarks against other like assets provides a
useful comparison of asset performance alongside other organisational KPIs and objectives.
Reporting to government
Reporting to government and central agencies on asset management and performance may be
required to assist government in making informed resource allocation decisions.
There are several asset-related reporting requirements that Accountable Officers provide to
government and central agencies, which can change over time.
Through its asset information management system (AIMS), an Accountable Officer must also
ensure that the organisation can provide relevant asset information and performance data to
government and central agencies as required, and is flexible enough to respond to reasonable
information reporting requests by the Government.
Evaluation of asset performance

As part of the performance management process, an Accountable Officer must regularly review
the performance of its organisations assets. They must also make any necessary changes to their
organisations asset management and risk management processes and systems. This will allow the
organisations asset base to continue to achieve the organisations service delivery objectives,
within available resources.

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13
3.1.5
Other requirements
Accountable Officers should establish asset management processes that help ensure:
their organisations assets support the services it delivers;
their organisations assets contribute to achieving government outcomes and meeting their
organisations service delivery needs; and
continuous improvement and adaptive learning in managing and maintaining their
organisations assets.
Additionally, Accountable Officers must ensure there are appropriate risk management strategies
and processes to support asset management, including processes to identify and maintain assets
that are at risk of critical service failure.
appropriate.
3.2
Planning
3.2.1
Overview
Accountable Officers should systematically identify their organisations service delivery and asset
needs over time, to establish a plan on how to manage their entire asset base and how to manage
individual assets throughout their lifecycle. This should be based on long-term service planning to
meet future service needs and demand.
Identifying changing asset needs by developing an asset management strategy assists Accountable
Officers to:
identify options and prioritise investment and divestment needs;
develop business cases as appropriate;
undertake cost benefit and real options analyses;
consider non-asset alternatives;
implement the appropriate accounting treatment and requirements for individual assets; and
identify funding options.
3.2.2
Asset management strategy

A key requirement of the AMAF is for Accountable Officers to develop an asset management
strategy for their organisations entire asset base over the whole asset lifecycle on a portfolio
basis.
The asset management strategy must be integrated into the organisations overall planning
framework, guided by the efficient and effective delivery of quality services. Incorporating the
asset management strategy within the organisations overall planning processes will enable an
Accountable Officer to make the most appropriate decisions about the organisations asset
profile, particularly when responding to such factors as:
new or changing service delivery requirements;
alternative methods of service delivery;
impact of alternative resource combinations on service outcomes;
resourcing changes; or
evolving technology.
14

February 2016
The asset management strategy should consider various options to achieve the organisations
desired service delivery results, and include an evaluation of the costs, benefits and risks
associated with each option.
The strategy must outline how the Accountable Officer will use the organisations assets to
support its service delivery objectives and incorporate planning for assets (including proposed
upgrades, acquisitions and disposals) over different periods of time (e.g. short term: one to three
years, medium term: four to nine years, and long term: 10 or more years). Accountable Officers
should consider their organisations existing asset base condition, capacity, capability and usage.
They should also consider available resources, funding constraints and competing service and
asset priorities. Accountable Officers should also give consideration to:
the policy, legal and accountability environment the organisation operates in;
the organisations service delivery goals and objectives;
the organisations corporate management and planning framework;
external or market factors (commercial, technological, environmental, or industry implications)
and risks to those factors;
the asset lifecycle, and how assets will be managed throughout the cycle, including the ability
to scale-up, delay acquisition or dispose of assets;
lifecycle costs of the assets;
resource availability;
private sector delivery options;
stakeholder needs;
performance monitoring, risk management processes and skills needed by staff;
the Accountable Officers asset management systems and process;
non-asset alternatives to service delivery;
the need to rationalise operations to improve service delivery or enhance cost effectiveness;
continuous improvement of asset management and adaptive learning within the
organisation; and
current and forecast demand for service delivery.
While addressing these issues, the strategy should be at an appropriate level to the organisation,
commensurate with the size and functions of the organisation.
For some organisations, the asset management strategy may be a single document, whereas for
others, such as asset-intensive organisations, multiple documents may be required.
The strategy is intended to be used for internal management purposes, and must be evaluated by
senior management, and updated where applicable, to ensure it remains suitable and effective.
Risk management and contingency planning

Risk management should be an integral part of an organisations culture, whether positive
(opportunities) or negative (threats). It should also be reflected in the organisations policies,
systems and processes to ensure sound financial management as well as efficient and effective
service delivery. This also applies to asset management.
Effective asset management includes identifying and assessing risks to enable well-informed
decisions about risk management and treatment plans.

February 2016
15
As part of their asset management strategies, Accountable Officers must incorporate asset risk
management planning, which describes the risk management strategies and actions
(e.g. treatment plans) to be implemented for assets under their control. Accountable Officers
must continue to monitor and evaluate the effectiveness of their risk management measures on a
regular basis and, if necessary, redefine them.
When developing asset risk management plans, consideration should be given to examining risks
across the whole asset lifecycle. Asset risk management plans should consider inclusion of the
following risks:
physical failure;
operational;
financial;
occupational health and safety;
third party; and
stakeholders.
As part of their organisations business continuity plans, required under the Standing Directions,
Accountable Officers should develop procedures for identifying and responding to incidents and
emergency situations, and maintaining the operational continuity of critical assets for service
delivery.
Planning for uncertainty and using real options

Good asset management requires the planning and acquisition of the most appropriate assets to
meet current and future service delivery demands. This requires informed decisions about which
assets are needed, where and in what numbers. However, future service delivery demands and
an assets performance meeting those demands may be subject to significant uncertainty.
For example:
future service delivery demand may depend on demographic, environmental or technological
outcomes, which are uncertain at the time of making decisions on asset planning; and
the performance of an asset may change due to the availability and price of inputs or due to
unforeseen changes in the condition of the asset.
Effective asset management includes identifying and assessing uncertainties to enable
Accountable Officers to respond when uncertain outcomes are realised. Adopting real options or
identifying alternative options which can be pursued if uncertainties materialise provide
organisations with flexibility to adapt when these uncertain outcomes are realised.
Where an organisations ability to achieve its service delivery objectives may be affected by
significant uncertainty, Accountable Officers should consider the value of acquiring or preserving
real options that could be exercised to adapt to changing circumstances. In these circumstances,
Accountable Officers should incorporate planning for uncertainty and real options in their
organisations long-term service planning, asset management strategies and risk management and
contingency planning.
3.2.3
Business cases for new asset proposals

All asset proposals seeking additional funding from government or seeking private sector
involvement should be developed in accordance with guidelines and methodologies developed by
DTF or otherwise endorsed by the Government. Requirements for business cases and processes
for the State budget are updated on an annual basis and are communicated to departments and
agencies by DTF. When developing business cases for new asset proposals, organisations should
utilise information they have collected through their AIMS and asset management strategy to
16

February 2016
demonstrate the need for additional investment. Business cases should factor in all relevant
capital and output costs, including any output price increase required to offset additional capital
assets charge and depreciation costs (if applicable).
3.2.4
Other policies
Other policies developed by or on behalf of Accountable Officers, such as financial, human
resources, risk management, planning, occupational health and safety, and knowledge
management should consider current asset management requirements so that these
requirements are evaluated, and where relevant, incorporated into key plans and practices across
the organisation.
principles outlined in the international standard ISO 55000 Asset Management Series as
appropriate.
3.3
Acquisition
3.3.1
Overview
Acquisition decisions should be taken within an integrated planning framework that takes account
of service delivery needs, corporate objectives, financial and budgetary constraints and the
Governments overall resource allocation objectives. During the acquisition phases Accountable
Officers must also adequately consider, on behalf of their organisation:
solutions to support service delivery that do not involve asset acquisitions;
risks in acquiring assets or delivering services;
the appropriate procurement method; and
the appropriate approval mechanism prior to acquisition.
3.3.2
Acquisition process
As part of the acquisition process, an Accountable Officer must consider the:
organisations asset management strategy;
nature of the organisations assets to be acquired or created;
market conditions and the implications for the organisations asset cost (is it a buyers or
sellers market?);
industry capacity (i.e. the number of potential contractors or suppliers capable of supplying the
assets);
industry standard (how the assets are normally procured in the industry);
suitability of contractors or suppliers;
available resources to manage procurement of the organisations asset; and
relevant internal/external approval processes (e.g. Government approval processes as part of
the annual State Budget).
To ensure a cost effective approach, non-asset solutions to service delivery should be considered
before deciding to purchase fixed assets. Additionally, private sector engagement options should
also be considered, such as the involvement of the private sector in the acquisition process or
delivery of services.

February 2016
17
3.3.3
Procurement method
Choosing an appropriate acquisition method is fundamental to the feasibility, development and
ultimate success of the procurement. Accountable Officers are responsible for choosing the most
appropriate method , and for identifying, assessing and allocating potential risks and optimising
investment return. The acquisition should be undertaken based on the asset management
strategy that the Accountable Officer has undertaken as part of their organisations service
delivery planning.
The method used to acquire assets should enable:
appropriate allocation of risks and obligations to relevant parties;
the definition of respective roles of those involved; and
the required outcomes of the acquisition process.
The choice of procurement method should be made by considering costs, financial benefits, risks,
delivery times and the period for which the asset is needed. The appropriate approval processes
for acquiring an asset should also be followed.
3.3.4
Other requirements
Accountable Officers should consider their organisations alignment with the processes and
appropriate.
3.4
Operation
3.4.1
Overview
During the operational phases to ensure their organisations assets are appropriately managed,
Accountable Officers need to consider:
asset monitoring and asset performance;
maintenance needs;
asset valuations;
asset utilisation; and
asset functionality.
3.4.2
Monitoring and preventive action

Accountable Officers must establish processes to identify, monitor and record the condition of
their organisations assets. Accountable Officers must also proactively identify potential asset
performance failures and identify options for preventive action. This should also include processes
for handling and investigating failures, incidents and non-conformities with asset management
strategies and procedures.
If a critical asset service failure incident occurs, Accountable Officers must take action to control
and address it, and make any necessary changes to organisational asset management practices to
minimise the possibility of the incident reoccurring. Accountable Officers must also review and
assess the effectiveness of any corrective actions they implement and make further adjustments
as required.
Accountable Officers must also establish policies and procedures that securely protect their
organisations assets against fraudulent activity, theft or improper use.
18

February 2016
3.4.3
Maintenance of assets
An appropriate maintenance program can sustain or extend an assets useful life. The benefits of
effective asset maintenance include:
a long-term reduction in lifecycle costs;
better asset performance and service;
the optimisation of asset life; and
improved public perception of the assets service and safety standards.
Planning for asset maintenance enables targeted action to be undertaken in a timely and cost
effective manner. This helps the organisations asset portfolio to remain productive for the lowest
possible long-term cost.
Accountable Officers must establish systems and processes for undertaking their organisations
maintenance activities.
Accountable Officers should ensure asset maintenance tasks are focused on high priority assets.
High priority assets might include those that affect health and safety or are operationally critical
while low priority assets might include those that have little value or have a relatively short
expected life. There may also be assets that require little or no maintenance, for example
furniture. Consideration will therefore need to be given to the resources Accountable Officers
allocate to maintenance tasks.
The maintenance program must be regularly reviewed by the Accountable Officer to determine
whether the maintenance effort is being allocated to the appropriate assets and is providing the
desired outcomes. As part of this review, the available resources for maintenance must be
examined to ensure that assets are maintained to the standard established by the Accountable
Officer with consideration for the impacts on service delivery.
Where asset management activities are devolved or outsourced including to entities excluded
from the Standing Directions, Accountable Officers should ensure that appropriate mechanisms
are in place to confirm that the service providers or entities excluded from the Standing Directions
are maintaining their organisations assets to an established acceptable standard, balanced
against appropriate service delivery trade-offs over time.
Information management
Comprehensive, accurate and up-to-date information on assets is vital to effective asset
management.
Access to information is important to ensure Accountable Officers can make informed decisions
about the physical and nancial performance of assets they control.
Accurate recording, identification, valuation and reporting procedures must be established so that
informed decisions to maintain, modify, rehabilitate, nd an alternative use for, or dispose of an
asset can be made. An Accountable Officer or asset manager cannot make these decisions
effectively if they do not have ready access to the necessary information. As such, Accountable
Officers must establish asset information management systems (AIMS),which includes asset
registers.
Under section 44B of the FMA asset registers are required to be established. The register of assets
is to be in the form, and contain the information, determined by the Minister for Finance after
consultation with the Victorian Managed Insurance Authority.
An AIMS must maintain up-to-date asset information as well as an historical record of both
financial and non-financial information over each assets lifecycle for the purpose of:
asset planning;

February 2016
19
asset performance monitoring and reporting; and

accountability.
The functional requirements of an AIMS will depend on the size and nature of an organisations
operations and asset portfolio, and should be configured to be fit for purpose. However,
information in the AIMS must be readily accessible to individuals who are accountable for the
control and management of a nominated asset or group of assets.
For an AIMS to fully support effective decision making about asset utilisation, it should:
be comprehensive, and include all assets under the control of the organisation;
be structured in a way that allows different classications of assets to be distinguished, and
treated appropriately;
capture details of all transactions affecting the assets, as they occur;
have associated procedures, controls and audit trails to maintain the integrity of the
information; and
include nancial information.
Having the above mentioned information stored in an AIMS will enable an Accountable Officer to
undertake more informed decision making, by being able to assess or identify:
the current condition of their organisations assets;
when assets need to be replaced;
information required to meet financial and regulatory requirements;
asset locations;
the level and frequency of asset maintenance programs;
lifecycle costs by asset or program; and
the individual or organisational unit accountable for the asset and the location of the asset.
Comprehensive information about assets can generate large amounts of data. Accountable
Officers must define their minimum information requirements, based on what is outlined above.
They must also implement effective processes to generate the required information and establish
necessary controls. The information processes should be appropriate given the nature of the
organisation.
The information in the AIMS must be regularly reviewed, to ensure that all of the Accountable
Officers organisations asset-related information is up to date.
Record keeping
As part of the AIMS, Accountable Officers must establish appropriate record keeping processes, to
meet operational needs and to satisfy relevant accounting standards and disclosure requirements,
including for their organisations contingent and intangible assets. Effective record keeping will
support the successful operation of the asset management system and associated processes.
It will also support the Accountable Officer in undertaking any internal or external audit or review
that may be conducted of their organisations asset management practices.
3.4.4
Asset valuation
As part of asset valuation, Accountable Officers must document policies and procedures for the
revaluation of assets.
These standards are available on the Australian Accounting Standards Board (AASB) website:
www.aasb.gov.au
20

February 2016
Accountable Officers are also required to adhere to the applicable Financial Reporting Directions
(FRDs) issued by DTF that relate to asset management, namely:
FRD 103D Non-financial physical assets;
FRD 106 Impairment of assets;
FRD 109 Intangible assets;
FRD 115 Non-current physical assets First time adoption; and
FRD 117 Contributions of existing non-financial assets to third parties.
The FRDs are available on the DTF website:
www.dtf.vic.gov.au/Publications/Government-Financial-Management-publications/Financial-Repo
rting-Policy/Financial-reporting-directions-and-guidance
Accountable Officers should also be cognisant of the Valuation Guidance which assists valuers and
preparers in understanding the methodology and requirements for the measurement and
valuation of non-current physical assets:
http://www.dtpli.vic.gov.au/property-and-land-titles/valuation/government-valuations/asset-valu
ations-for-government#non-currentphysicalassets
3.4.5
Other key requirements

In managing and monitoring their organisations assets, Accountable Officers should also consider
and assess:
asset utilisation rates;

how asset utilisation and functionality has and may change over time; and
asset functionality requirements.
appropriate.
3.5
Disposal
Decisions to dispose of an asset require thorough examination and economic appraisal. Like
acquisition decisions, they should be taken within an integrated planning framework that takes
account of service delivery needs, corporate objectives, nancial and budgetary constraints and
the Governments overall resource allocation objectives.
Planning for disposal should start well before the economic life of the asset has ended or the need
for the service has finished and should incorporate consideration of unplanned disposals or
destruction of assets.
Accountable Officers must comply with relevant approval processes and, where possible, select a
disposal method including retirement, replacement, renewal or redeployment, that maximises the
financial benefits associated with the disposal.
appropriate.

February 2016
21
4.
Key terms/definitions
Accountability: the attribution of responsibility for asset management activities.

Accountable Officer: as defined in Section 3 of the FMA. Unless the Minister otherwise
determines:
a) the Accountable Officer for a department is the department head of that department; and
b) the Accountable Officer for a public body is the chief executive officer, by whatever name
called, of that body.
Agency: means any public body or Department.
Asset: an item or thing that has potential value to an organisation, and for which the organisation
has a responsibility. For the purposes of the Asset Management Accountability Framework, asset
does not include financial assets.
Asset management: the coordinated activities of an organisation to realise lifecycle value from
assets in delivery of its objectives.
Realisation of value will normally involve a balance of costs, risks, opportunities and performance
benefits. When asset outputs or required service levels are pre-determined and non-negotiable,
or when value is negative (e.g. dominated by risks or liabilities), realise lifecycle value may
represent minimising the combination of costs and risks.
Asset management strategy: a set of agreed principles and actions that determines how an
organisation manages its assets over a defined period of time.
Asset management system: a set of interrelated or interacting elements of an organisation that
establish asset management policies and objectives and processes to achieve those objectives.
A management system can address a single discipline or several disciplines. The system elements
include the organisations structure, roles and responsibilities, planning and operation.
The scope of a management system may include the whole of the organisation, specific and
identified functions of the organisation and sections of the organisation, or one or more functions
across a group of organisations. However, an asset management system will normally realise
greater value if it takes a cross-functional approach over the asset lifecycle.
Continual improvement: an ongoing effort to improve performance.
Functionality: the range of activities and functions an asset delivers.
Lifecycle: the period of value realisation from an asset by an organisation. There may be a number
of lifecycles within an assets whole life. Lifecycle represents an organisations view of an asset,
whereas whole life covers an assets continuing life history through potentially multiple cycles of
ownership or responsibility (i.e. an asset for successive organisations).
Lifecycle costing: a key asset management tool that factors in the whole of life impacts of
planning, acquiring, operating, maintain and disposing of an asset. It is a process that analyses the
known costs over an asset or non-assets life to reflect the true overall cost of acquiring an asset.
Lifecycle processes: include identification of needs, creation or acquisition, utilisation, care and
disposal, decommissioning or renewal.
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February 2016
Non-physical assets (intangible assets): are identifiable non-monetary assets without physical
substance. They are generally long-term resources of an organisation and derive their value from
intellectual or legal rights, and from the value they add to the other assets.
Common examples include patents, copyrights, trademarks, designs, computer software and
licenses.
Organisation: means any public body or Department.
Physical assets: comprise land, buildings, infrastructure, plant and equipment, cultural collections,
natural resources and information and communication technology (ICT) assets.
Public entity: has the meaning as defined in the Public Administration Act 2004.
Real option: the rightbut not the obligationfor an investor to undertake certain business
initiatives and actions in the future to optimise the opportunities and risks of an investment over
its lifecycle and mitigate the risks that an investment will be regretted. Real options do not
eliminate the change of regret but seeks to limit the extent of the regret.
Risk: the effect of uncertainty on objectives.
Risk management: the coordinated activities to direct and control an organisation with regard to
risk.
Responsible Body: has the meaning as defined by the Standing Directions of the Minister of
Finance. Responsible Body means:
in a government department, the Accountable Officer; and
every other public sector agency, the board.
Useful life: the period over which an asset is expected to provide the organisation with service.
Utilisation: how intensively an asset is being used to meet the Accountable Officers service
delivery objectives in relation to the assets potential capacity.

February 2016
23
Appendix 1 Mandatory requirements
The following details the mandatory requirements Responsible Bodies and Accountable Officers
must meet to allow for full attestation of compliance with the framework. It does not include asset
management requirements covered by other frameworks, for example meeting Australian
Accounting Standards.
In cases where assets are managed by multiple agencies within a portfolio, Responsible Bodies may
not need to attest to compliance with some mandatory requirements of the framework for some
assets when another agency within the portfolio has a clearly defined responsibility for meeting
that mandatory requirement.
Chapter Area
Requirement

3.1
3.1.1
3.1.2
Overview and key

requirements
Accountable Officers must apply the mandatory requirements of
Resourcing and
skills
Accountable Officers must ensure that asset management
Governance
Accountable Officers must establish appropriate governance
the AMAF consistent with their organisations asset threshold.

functions are established and that they are appropriately
resourced with qualified and/or skilled staff.
Where asset management activities are devolved or outsourced
including to entities excluded from the Standing Directions,
Accountable Officers must ensure that contracted service
providers or entities excluded from the Standing Directions have
arrangements in place to ensure their staff are appropriately
skilled and trained.
frameworks to support the management of assets in their direct
control, as well as being considerate of the governance
frameworks that other organisations within their portfolio have
to support management of assets in their control.
Accountable Officers must comply with all mandatory
requirements under other government policies when carrying
out asset management planning and activities.
24

February 2016
Chapter Area
Requirement
3.1.2
Responsibility, authority and accountability for all stages of the
Allocating asset
management
responsibility
3.1.3
3.1.4
asset lifecycle must be clearly defined and allocated within an

Accountable Officers operating frameworks. This includes
allocating, documenting and clearly communicating relevant
asset management responsibilities.
All asset management activities must only be carried out under
proper authorisation, including appropriate financial and other
delegations.
Accountable Officers must document who is responsible for
monitoring compliance with the AMAF and ensuring that systems
and processes to support the AMAF are in place.
Accountable Officers must document who is responsible and
accountable for decision making in relation to varying stages of
an assets lifecycle
Where asset management functions are devolved or outsourced
Accountable Officers must have appropriate internal
management processes established to ensure that they and their
outsourced providers or entities excluded from the Standing
Directions are maintaining and managing assets to the required
standard(s) (e.g. regular performance reporting).
Attestation
requirements
The Responsible Bodys audit committee, or an alternative
Monitoring asset
performance
Accountable Officers must establish performance standards and
review mechanism when there is no audit committee , must

verify the Responsible Bodys attestation of compliance with
requirements of the Standing Direction on asset management
prior to finalising the attestation in the annual report. Agencies
are also subject to any other requirements under the Directions
to ensure compliance and support the attestation.
targets for their assets, considerate of available resources that
form part of their broader service planning goals. Accountable
Officers must also establish and maintain management processes
to regularly record, monitor and assess performance, and use
those results to improve performance.
The performance and utilisation of assets must be reviewed
periodically.
Asset performance monitoring must also be incorporated into
the overall corporate and strategic planning framework.
Refer to provisions in the Standing Directions on the role of the Responsible Body when the agency has been exempt from audit
committee requirements..

February 2016
25
Chapter Area
3.1.4
Requirement
Asset management Accountable Officers must establish systems and processes for
system
monitoring the performance of both:
performance
their assets; and
the overall asset management systems themselves;
to ensure that the systems have been implemented and

maintained, and are effective in meeting asset management
requirements and responsibilities.
From 2020-21 Responsible Bodies must, at least every three
years, conduct a self-assessment of the level of asset

management maturity within their organisation, and other
organisations within their annual report, and state this in their
annual report. As part of this self-assessment, Responsible
Bodies must evaluate:
the maturity of their asset management systems and
practices;
the maturity of their systems and practices against their
aspirational target; and
their path towards achieving their aspirational target.
3.1.4
Reporting to
Government
Through its asset information management system (AIMS), an
Accountable Officer must also ensure that the organisation can

provide relevant asset information and performance data to
government/central agencies as required, and is flexible enough
to respond to reasonable information reporting requests by the
Government.
3.1.4
Evaluation of asset As part of the performance management process, an

Accountable Officer must regularly review the performance of its
performance
organisations assets. They must also make any necessary
changes to their organisations asset management and risk
management processes and systems. This will allow the
organisations asset base to continue to achieve the
organisations service delivery objectives, within available
resources.
3.1.5
Other
Requirements
Accountable Officers must ensure there are appropriate risk
management strategies and processes to support asset

management established, including processes to identify and
maintain assets that are at risk of critical service failure.
Planning
3.2.2
26
Asset management A key requirement of the AMAF is for Accountable Officers to

develop an asset management strategy for their organisations
strategy
entire asset base over the whole asset lifecycle on a portfolio
basis.
The strategy must outline how the Accountable Officer will use
the organisations assets to support its service delivery objectives
and incorporate planning for assets (including proposed
upgrades, acquisitions and disposals) over different periods of
time (e.g. short term: one to three years, medium term: four to
nine years, and long term: 10 or more years). The strategy must
be evaluated by senior management, and updated where
applicable.

February 2016
Chapter Area
Requirement
3.2.2
As part of their asset management strategies, Accountable
Risk management
and contingency
planning
Officers must incorporate asset risk management planning, which

describes the risk management strategies and actions (e.g.
treatment plans) to be implemented for assets under their
control.
Accountable Officers must continue to monitor and evaluate the
effectiveness of their risk management measures on a regular
basis and, if necessary, redefine them.
Acquisition
3.3.1
Overview
During the acquisition phases Accountable Officers must
adequately consider, on behalf of their organisation:

solutions to support service delivery that do not involve asset
acquisitions;
risks in acquiring assets or delivering services;
the appropriate procurement method; and
the appropriate approval mechanism prior to acquisition.
3.3.2
Acquisition process As part of the acquisition process, an Accountable Officer must

consider the:
organisations asset management strategy;
nature of the organisations assets to be acquired or created;
market conditions and the implications for the organisations
asset cost (is it a buyers or sellers market?);
industry capacity (i.e. the number of potential contractors or
suppliers capable of supplying the assets);
industry standard (how the assets are normally procured in
the industry);
suitability of contractors or suppliers;
available resources to manage procurement of the
organisations asset; and
relevant internal/external approval processes (e.g.
Government approval processes as part of the annual State
Budget).
Operation
3.4.2
Monitoring and
preventive action
Accountable Officers must establish processes to identify,
monitor and record the condition of their organisations assets.

Accountable Officers must establish processes to proactively
identify potential asset performance failures and identify options
for preventive action.
If a critical asset service failure incident occurs, Accountable
Officers must take action to control and address it, and make any
necessary changes to asset management practices to minimise
the possibility of the incident reoccurring.
Accountable Officers must also review and assess the
effectiveness of any corrective actions they implement and make
further adjustments as required.
Accountable Officers must also establish policies and procedures
that securely protect their assets against fraudulent activity or
improper use.

February 2016
27
Chapter Area
Requirement
3.4.3
Maintenance of
assets
Accountable Officers must establish systems and processes for
Information
management
Accurate recording, identification, valuation and reporting
3.4.3
undertaking their maintenance activities.

The maintenance program must be regularly reviewed by the
Accountable Officer to determine whether the maintenance
effort is being allocated to the appropriate assets and is
providing the desired outcomes. As part of this review, the
available resources for maintenance must be examined to ensure
that assets are maintained to the standard established by the
Accountable Officer with consideration for the impacts of service
delivery.
3.4.3
Record keeping
procedures must be established.

Accountable Officers are required to establish an asset
information management system (AIMS), which includes asset
registers.
information in the AIMS must be readily accessible to individuals
who are accountable for the control and management of a
nominated asset or group of assets.
An AIMS must maintain up-to-date asset information as well as
an historical record of both financial and non-financial
information over each assets lifecycle.
Accountable Officers must define their minimum information
requirements, based on what is outlined in section 3.4.3. They
must also implement effective processes to generate the
required information and establish necessary controls.
The information in the AIMS must be regularly reviewed, to
ensure that all of the Accountable Officers organisations
asset-related information is up to date.
As part of the AIMS, Accountable Officers must establish
appropriate record-keeping processes, to meet operational

needs and to satisfy relevant accounting standards and disclosure
requirements, including for their organisations contingent and
intangible assets.
3.4.4
Asset valuation
As part of asset valuation, Accountable Officers must document
policies and procedures for the revaluation of assets.
Disposal
3.5
Accountable Officers must comply with relevant approval
processes and, where possible, select a disposal method

including retirement, replacement, renewal or redeployment,
that maximises the financial benefits associated with the
disposal.
28

February 2016
Appendix 2 - Guidance
Chapter
Area
Guidance
3.1
3.1.1
Overview and key

requirements
Accountable Officers should ensure decisions about asset
Resourcing and skills
Accountable Officers should determine the resources required (e.g.
management, including ownership and retention are always service

driven and take account of all stages of the lifecycle.
staff, equipment and systems), and the skills and education needed
by their asset management staff for each stage of the asset lifecycle.
3.1.1
3.1.2
3.1.4
3.1.4
3.1.4
Promotion of asset
management
Management should drive implementation and adherence to the
Allocating asset
management
responsibility
Accountable Officers should ensure allocation of asset management
Monitoring asset
performance
Performance should be monitored by Accountable Officers against
Asset management
system performance
The performance monitoring processes should ensure that the
Key performance
indicators
In order to ascertain the performance of an organisations assets,
AMAF, the organisations asset management system and any

supporting policies.
In promoting/communicating the AMAF and the organisations asset
management strategy, an Accountable Officer should require staff to
be informed of:
the role of asset management within the organisation; and
their contribution, role and responsibilities for asset management.
Management should drive a culture of continuous improvement in
asset management.
Management should ensure asset management supports the
Victorian public sector to deliver high quality and efficient services to
the community.
responsibilities and accountabilities should be incorporated into
relevant staff performance plans.
Appropriate resources should be allocated to staff with asset
management responsibilities.
their own established asset standards, targets or benchmarks to
establish whether assets are being managed effectively,
underperforming or costly to own and operate.
When comparing performance outcomes against asset standards or
benchmarks, the criteria should be considerate of, where possible,
relevant data from other comparable organisations or assets.
overall asset management system is updated as knowledge improves
and circumstances change.
key performance indicators (KPIs) should be established.
Establishing KPIs and targets for assets should be driven by
government policy objectives, established service standards, and

available resources.

February 2016
29
Chapter
Area
Guidance
3.1.5
Other requirements
Accountable Officers should establish asset management processes
that help ensure:

their organisations assets support the services it delivers;
their organisations assets contribute to achieving government
outcomes and meeting their organisations service delivery needs;

and
continuous improvement and adaptive learning in managing and
maintaining their organisations assets.

Accountable Officers should also consider their organisations
alignment with the processes and principles outlined in the

international standard ISO 55000 Asset Management Series, as
appropriate.
Planning
3.2.1
Overview
Accountable Officers should systematically identify their
organisations service delivery and asset needs over time, to

establish a plan on how to manage their entire asset base and how
to manage individual assets throughout their lifecycle. This should be
based on long-term service planning to meet future service needs
and demand.
3.2.2
Asset management
strategy
The asset management strategy should consider options to achieve
the organisations desired service delivery results, and include

evaluation of the costs, benefits and risks associated with each
option.
Accountable Officers should consider their organisations existing
asset base condition, capacity, capability and usage when developing
an asset management strategy. They should also consider available
resources, funding constraints and competing service and asset
priorities.
When developing an asset management strategy, Accountable
Officers should consider:
the policy, legal and accountability environment the organisation
operates in;
the organisations service delivery goals and objectives;
the organisations corporate management and planning
framework;
external or market factors (commercial, technological,
environmental, or industry implications) and risks to those

factors;
the asset lifecycle, and how assets will be managed throughout
the cycle, including the ability to scale-up, delay acquisition or

dispose of assets;
lifecycle costs of the assets;
resource availability;
private sector delivery options;
stakeholder needs;
performance monitoring, risk management processes and skills
needed by staff;
the Accountable Officers asset management systems and
process;
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February 2016
Chapter
Area
Guidance
non-asset alternatives to service delivery;
the need to rationalise operations to improve service delivery or
enhance cost effectiveness;

continuous improvement of asset management and adaptive
learning within the organisation; and

current and forecast demand for service delivery.
The strategy should be at an appropriate level to the organisations
size and functions.

3.2.2
Risk management
When developing asset risk management plans, consideration should
be given to examining risks across the whole asset lifecycle.

As part of their organisations business continuity plans required
under the Standing Directions, Accountable Officers should develop

procedures for identifying and responding to incidents and
emergency situations and maintaining the operational continuity of
critical assets for service delivery.
3.2.2
Planning for
uncertainty and using
real options
Where an organisations ability to achieve its service delivery
objectives may be affected by significant uncertainty, Accountable

Officers should consider the value of acquiring or preserving real
options that could be exercised to adapt to changing circumstances.
Accountable Officers should incorporate planning for uncertainty
and real options in their organisations long-term service planning,
asset management strategies and risk management and contingency
planning.
3.2.3
Business cases for new All asset proposals seeking additional funding from government or
seeking private sector involvement should be developed in
asset proposals
accordance with guidelines and methodologies endorsed by the
Government and DTF.
When developing business cases for new asset proposals,
organisations should utilise information they have collected through
their AIMS and asset management strategy to demonstrate the need
for additional investment.
Business cases should factor in all relevant capital and output costs,
including any output price increase required to offset additional
capital assets charge and depreciation costs (if applicable).
3.2.5
Other policies
Other policies developed by or on behalf of Accountable Officers,
such as financial, human resources, risk management, planning,

occupational health and safety, and knowledge management should
consider current asset management requirements so that these
requirements are evaluated, and where relevant, incorporated into
key plans and practices across the organisation.
Accountable Officers should also consider their organisations
alignment with the processes and principles outlined in the
international standard ISO 55000 Asset Management Series as
appropriate.
Acquisition
3.3.1
Overview
Acquisition decisions should be taken within an integrated planning
framework that takes account of service delivery needs, corporate

objectives, financial and budgetary constraints and the
Governments overall resource allocation objectives.

February 2016
31
Chapter
Area
Guidance
3.3.2
Acquisition process
Non-asset solutions to service delivery should be considered before
deciding to purchase fixed assets.

3.3.3
Procurement method
Accountable Officers are responsible for choosing the most
appropriate method, and for identifying, assessing and allocating

potential risks and optimising investment return. The acquisition
should be undertaken based on the asset management strategy that
the Accountable Officer has undertaken as part of their
organisations service delivery planning.
The choice of procurement method should be made by considering
costs, financial benefits, risks, delivery times and the period for
which the asset is needed in addition to appropriate approval
processes.
The method used to acquire assets should enable:
appropriate allocation of risks and obligations to relevant parties;
the definition of respective roles of those involved; and
definition of the required outcomes of the acquisition process.
Operation
3.4.3
Maintenance of assets Accountable Officers should ensure asset maintenance tasks are
focused on the higher priorities, within the available resources.
Where asset management activities are devolved or outsourced
Accountable Officers should ensure that appropriate mechanisms
are in place to confirm that the service providers or entities excluded
from the Standing Directions are maintaining their organisations
assets to an established acceptable standard, balanced against
appropriate service delivery trade-offs over time.
3.4.3
Information
Management
The functional requirements of an AIMS will depend on the size and
Other requirements
In managing and monitoring their assets, Accountable Officers
3.4.5
nature of an organisations operations and asset portfolio, and

should be configured to be fit for purpose.
should also consider and assess
asset utilisation rates;
how asset utilisation and functionality has and may change over
time; and
asset functionality requirements.
Accountable Officers should also consider their alignment with the
processes and principles outlined in the international standard ISO
55000 Asset Management Series as appropriate.
Disposal
32

February 2016
Chapter
Area
Guidance
Decisions to dispose of an asset require thorough examination and
economic appraisal. Like acquisition decisions, they should be taken

within an integrated planning framework that takes account of
service delivery needs, corporate objectives, nancial and budgetary
constraints and the Governments overall resource allocation
objectives.
Planning for disposal should start well before the economic life of
the asset has ended or the need for the service is finished and should
incorporate consideration of unplanned disposals or destruction of
assets.
Accountable Officers should also consider their alignment with the
processes and principles outlined in the international standard
ISO 55000 Asset Management Series as appropriate.

February 2016
33
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Asset Management Accountability

State of Victoria 2016

Overview of the Asset Management Accountability Framework ............. 1

Background and overview ................................................................................................. 1

The asset lifecycle ................................................................................... 7

Leadership and accountability ........................................................................................... 9

Overview of the Asset Management Accountability

Background and overview

Asset management responsibilities

International Standards Organisation - IS055000

Asset Management Accountability Framework

Purpose of the Asset Management Accountability Framework

Asset Management Accountability Framework

Managing assets effectively

Figure 2: Service planning interface with asset planning and management

Asset Management Accountability Framework

Integrated into planning frameworks

Asset Management Accountability Framework

Asset Management Accountability Framework

The asset lifecycle

Asset management strategy

Leadership and accountability

Asset Management Accountability Framework

Asset Management Accountability Framework

Leadership and accountability

Promotion of asset management

Asset Management Accountability Framework

Allocating asset management responsibility

Asset Management Accountability Framework

Application and Attestation

Application and attestation

Asset Management Accountability Framework

Asset management system performance

Asset Management Accountability Framework

Key performance indicators

Evaluation of asset performance

Asset Management Accountability Framework

Asset management strategy

Asset Management Accountability Framework

Risk management and contingency planning

Asset Management Accountability Framework

Planning for uncertainty and using real options

Business cases for new asset proposals

Asset Management Accountability Framework

Asset Management Accountability Framework

Monitoring and preventive action

Asset Management Accountability Framework

Asset Management Accountability Framework

asset performance monitoring and reporting; and

Asset Management Accountability Framework

Other key requirements

asset utilisation rates;

Asset Management Accountability Framework

Accountability: the attribution of responsibility for asset management activities.

Asset Management Accountability Framework

Asset Management Accountability Framework

Appendix 1 Mandatory requirements

Leadership and accountability

Overview and key

Accountable Officers must apply the mandatory requirements of

Accountable Officers must ensure that asset management

Accountable Officers must establish appropriate governance

the AMAF consistent with their organisations asset threshold.

Asset Management Accountability Framework